RePowerEU: The plan to end energy dependency on Russia
In light of the invasion of Ukraine, the European Commission unveiled the plan to phase out Russian imports of natural gas, oil, and coal. Would this be the end of European dependency on Russia?
As the Russian invasion of Ukraine distances itself from a fast and decisive conflict, becoming long and deadly as days pass by, the world begins to suffer the economic consequences caused by it. The main aspect is related to the energy sector since Russia covers a high stake in the global market in terms of oil, coal, and natural gas. As its primary importer, can the European Union deliver a swift response promptly to its dependency on Russian commodities?
Europe found itself deeply vulnerable to the crash in supply and high prices caused by sanctions against Russian companies and financial institutions. The European Union imports some 90% of natural gas, 45,3% from Russia; Moscow also represents 27% and 46% of oil and coal imports, respectively[1]. In total, up to 190bcm (billion cubic metres) of natural gas is delivered to the EU each year, 50bcm through Ukrainian territory[2].
In an attempt to face this scenario of dependence on Russian raw materials, the European Commission unveiled the RePowerEU plan, aiming to accelerate the EU’s transition towards green energies as well as diversify its suppliers of gas, oil, and coal. The idea of the project is to add up to the Fit for 55 Goals and accelerate the energy transition and diversification while decreasing the participation of Russia as an energy supplier[3], ending Europe’s dependence on Moscow by 2027.
What does RePowerEU imply?
One of the proposed ideas is to seek other partners capable of offering the necessary goods. The European Union and the United States reached a deal on March 25th for a supply of 15bcm of LNG (Liquified Natural Gas)[4]. Norway is also set to increase its exports of gas and oil to Europe through its already-installed pipelines reaching Germany, France, Belgium, and the newest pipeline connecting to Poland, which is scheduled to start its operations this year[5]. It is also expected that the EU will seek renewed partnerships with other countries in Northern Africa and the Middle East Region; Italy, for instance, is consolidating partnerships in Africa, mainly Algeria and Libya, as suppliers capable of replacing the gas imports from Russia, that alone accounts for some 40% of the total Italian imports of such commodity [6].
Alongside, the Commission will propose legislation to make it compulsory for the 27 Member States to fill up their natural gas stocks to at least 90% by October 1st of each year, to avoid sudden spikes in price and to give Member States time to respond to uncertainties in supply, as what happened during the pandemic and is currently happening with the ongoing conflict in Eastern Europe [7].
Last year, in light of high gas prices, a toolbox of measures was unveiled aiming at fighting price volatility. The toolbox allows a series of measures related to tax reduction, social support to those more vulnerable, the modernisation of houses and buildings to become more energy-efficient, and enhanced cooperation within the bloc [8]. Now with the RePowerEU to complement the toolbox, the bloc expects to have a powerful set of goals and measures to fight spikes in energy prices and its heavy dependence on Russia.
Other proposals include more investments in biomethane and hydrogen, as well as solar and wind energy. On biomethane, the Commission estimates the production of 35bcm per year by 2030, including productions made by private farms and their related organic wastes, to reduce the dependence on national providers. Regarding hydrogen, new plans for infrastructure investments and increasing production should replace up to 50bcm of imported gas. On wind and solar energy, together, it is estimated that they could substitute up to 170bcm of Russian imports[9].
The EU’s common challenges in the energy sector
Although ambitious, the Commission’s plan may come as way too optimistic for the current reality of the European Union. Phasing out the bloc’s dependency on Russian gas, oil, and coal on time may be harder than what is being predicted by policymakers in Brussels.
Russian pipelined commodities are still one of the most convenient ways of acquiring huge amounts of such products[10]. Imports from other countries, like the USA, Algeria or Israel may be more expensive due to the lack of proper infrastructure or the geographical distance from Europe, increasing costs considerably. In a scenario of already high prices, it could directly affect millions of vulnerable families and small businesses.
Another point to take into consideration is the internal fight between countries supportive of using nuclear energy as a substitute for gas, oil, and coal, and those against it. France, with nuclear energy accounting for almost 70% of the total energy production in the country [11], is the most outspoken supporter of nuclear technology but counts on the help of some other Eastern countries, like Hungary, the Czech Republic, and Bulgaria (all three countries having more than a third of their energy production coming from this source of energy)[12]. Berlin, on the other hand, insists on eliminating all its nuclear power plants by the end of this year and has been the fiercest nation against including nuclear energy in the list of green energies under the European plans for a green transition. As one of the most dependent nations on Russian gas, Germany has been very cautious about embracing harder sanctions against Russian energy companies and keeps pushing for the use of gas and oil instead of nuclear energy as transition sources to greener ones[13].
This high dependency hinders the bloc’s ability to respond in a stronger way to the invasion of Ukraine by Russian forces. Even though the EU already adopted an extensive package of sanctions and measures to cripple Moscow’s economy[14][15], the energy sector has been mostly left out of harder measures, much of a recognition that such measures could disrupt the European economy.
The fifth package of sanctions against Russia, unveiled by the EU on the 8th of April, touches for the first time on the energy issue [16] and tries to revert the scenario of considerable apathy in tackling the energy issue more efficiently. Even though only coal will be banned so far, the less imported of the three main fossil energy sources Europe uses, and effectively taking place only by August [17], with this measure, the EU tries to send a strong message to Moscow that Europe will not keep importing billions of euros of such commodities while atrocities are perpetrated by the Russian Army in Ukraine.
On renewable energies, it is to be noted that measures related to developing new energy sources, like wind and solar energy, hydrogen, and biomethane, require extensive investment in new infrastructure, so that the energy could be produced, stored, and transported to the final users. Besides that, many new energy sources are still considerably more expensive than Russian pipelined gas. In a post-pandemic scenario and with the war in Ukraine directly affecting the EU economy, financing such an extensive program on such short notice may strain the EU’s budget and may not be done quickly.
Conclusion
As the Union seeks to decarbonise its economy using natural gas as transition energy, it should seek new partners and develop new infrastructures to safeguard the influx of such commodities. The green light for the construction of the Eastmed-Poseidon pipeline connecting Israel to the EU countries of Cyprus, Greece, and Italy shows that Europe is seeking to diversify its suppliers of gas [18]; Azerbaijan may also have its participation enhanced in gas imports in the future [19] through its TANAP Pipeline (Trans-Anatolian Natural Gas Pipeline), connecting the Caucasian country to Bulgaria and Greece.
The RePowerEU also stresses the necessity of building a new future-proof supply chain of energy, capable of working with different energy sources, in line with future technologies, increasingly more diverse, such as hydrogen and electricity in the transportation sector, and solar energy for heating purposes. Contemporary to it, transforming the power grid of countries into a more intertwined system, to optimise the use of energy and its byproducts, to help reduce energy waste, should be also a top priority.
The construction of such energetic infrastructures inside the EU is urgent, to avoid the high dependency of some Member States on the sole supplier of important commodities like those provided by Russia. If the EU wishes to provide all its countries with the same energy security, it needs to make sure that all 27 Member States are linked under a single European energy grid and can rely on each other during difficult moments, avoiding economic and social disruptions.
Such substantial changes require time and money, and will hardly be implemented as the war in Ukraine persists. However, despite all mentioned aspects, the RePowerEU is to be praised; ending European high energy dependency on Russian commodities is vital not only for the European economy but also for its international relations objectives. If the EU seeks to sell itself as the leading actor in the energy transition to a green economy and strong diplomatic player, the bloc cannot depend so heavily on a country that represents the opposite values and interests, and that still sees sovereign nations as their influence zone, not free to choose their own path and making war when thwarted.
